Pegasus Supply Solutions Pty Ltd v Collector of Customs

Date of hearing: 14 and 15 March 2022

Counsel for the Appellant: Mr M Hall SC with Mr T Flaherty

Counsel for the Respondent: Ms A Mitchelmore SC with Ms T Phillips

Solicitor for the Respondent: Australian Government Solicitor

BETWEEN: PEGASUS SUPPLY SOLUTIONS PTY LTD ACN 128 450 751 Appellant

AND: COLLECTOR OF CUSTOMS Respondent

order made by: GOODMAN J DATE OF ORDER: 1 MAY 2024

1. The appeal be allowed.
2. The order made by the Administrative Appeals Tribunal on 24 November 2020 be set aside.
3. The matter be remitted to the Tribunal for determination according to law. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. A. INTRODUCTION [1] B. BACKGROUND [9] C. THE PROCEEDING BEFORE THE TRIBUNAL [19] C.1 Request made at a pre-trial directions hearing [20] C.2 Request made on the first day of the hearing [22] D. STATUTORY CONTEXT [24] E. THE AMENDED NOTICE OF APPEAL AND THE NOTICE OF CONTENTION [26] F. THE CONSTRUCTION OF SECTIONS 35A AND 37 OF THE CUSTOMS ACT [36] F.1 Introduction [36] F.2 The Tribunal's reasoning [36] F.3 Consideration [42] F.4 The consequences of the Tribunal's misconstruction of sections 35A and 37 of the Customs Act [60] G. PROCEDURAL FAIRNESS AND THE TRIBUNAL [62] G.1 Introduction [62] G.2 The obligation to afford procedural fairness [64] G.3 The content of the obligation to afford procedural fairness [66] G.4 Failure to afford procedural fairness and to comply with s 39 of the AAT Act [68] G.5 Should the Tribunal's order be set aside and the matter remitted to the Tribunal? [79] H. THE REMAINING QUESTIONS OF LAW AND GROUNDS OF APPEAL [81] H.1 Failure to consider particular evidence [82] H.2 The making of serious findings without evidence [88] H.3 The remittal by the Tribunal to the Collector [92] I. CONCLUSION [93]

A. INTRODUCTION 1 The appellant, Pegasus Supply Solutions Pty Ltd, at material times operated two warehouses in Marrickville in Sydney where it stored goods which were subject to the operation of the Customs Act 1901 (Cth). 2 On 10 October 2016, following a stocktake conducted in June and July 2016, the respondent Collector of Customs issued a request to account to Pegasus, dated 9 October 2016, requiring it to account for particular goods in accordance with s 37 of the Customs Act. 3 There followed extensive communications between Pegasus and the Collector's representatives concerning the relevant goods, during which Pegasus invited the Collector's representatives to return to the warehouses in order to satisfy themselves as to the presence and quantity of the goods the subject of the request to account. The Collector's representatives declined to do so. 4 On 29 August 2017, the Collector issued a demand to Pegasus, under s 35A of the Customs Act, for the payment of $1,638,201.88. 5 In September 2017, Pegasus filed an application with the Administrative Appeals Tribunal under s 273GA of the Customs Act for review of the Collector's decision to make the demand. 6 Following a hearing which occupied nine hearing days, the Tribunal published its decision and reasons for decision: Pegasus Supply Solutions Pty Ltd and Collector of Customs [2020] AATA 4688 (T). The Tribunal set aside the demand and remitted the matter to the Collector for reconsideration in accordance with the Tribunal's direction that Pegasus had failed to account to the Collector only in respect of particular goods identified in Schedule 4 to the Tribunal's reasons. The Collector subsequently issued a new demand, for $1,321,951.89. 7 This proceeding is Pegasus's appeal from the decision of the Tribunal, pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). Although the amended notice of appeal referred to s 39B of the Judiciary Act 1903 (Cth), this was not pursued on the appeal. 8 For the reasons set out below, the appeal should be allowed on the basis that the Tribunal failed to afford procedural fairness to Pegasus when it declined a request by Pegasus that it inspect goods at Pegasus's warehouses in circumstances where the Tribunal stood in the shoes of the Collector and s 37 of the Customs Act provided that a means of accounting available to the recipient of a request to account is to have the Collector sight goods the subject of the request to account.

B. BACKGROUND 9 Pegasus, which at material times held a warehouse licence under Part V of the Customs Act, operated two warehouses in Marrickville, where it stored goods that were subject to the operation of that Act. The goods relevant to the present proceeding are alcohol and tobacco products which had entered the warehouses prior to mid-2016. 10 On 12 May 2016, the Collector notified Pegasus of an audit of its operations at the warehouses for the period from 1 July 2012 to 30 June 2016. The Collector foreshadowed an onsite inspection, and the examination of relevant records; and requested that Pegasus be ready to show the audit personnel any warehoused goods, and all records relating to the movement of such goods to and from the warehouse. 11 On 20, 21 and 28 June, and 1 July 2016, the Collector's officers attended Pegasus's warehouses and, with the assistance of Pegasus personnel, undertook a stock take count of relevant goods. 12 On 10 October 2016, as noted above, the Collector issued the request to account to Pegasus. The request to account was in the following form: Request to account for customable goods … You are hereby requested under section 37 of the Customs Act 1901 to account for the customable goods listed in Appendix "A" Imports and Appendix "B" Exports to the satisfaction of a Collector. Please also complete the attached questionnaire in Appendix "C". What you need to do To account for these goods, you need to successfully demonstrate to us that the goods were dealt with in accordance with the Customs Act 1901. By 27 October 2016, provide a written response, including any supporting evidence, to: Australian Taxation Office … If you do not satisfactorily account for the goods by this date, we will send you a demand to pay an amount equal to the customs duty on the goods. The amount of any such demand will be calculated at the duty rate payable on the day of the demand. (emphasis in original) 13 The effect of appendices "A" and "B" to the request to account was described by the Tribunal in the following terms (T[85] to [87]): 85. The 9 page "Appendix A" related to imported goods. It detailed the names, and both the anticipated and counted quantities of approximately 109 alcohol products and 138 tobacco products (about 91 of which were owned by Trojan Trading). The details relating to Pegasus owned goods recorded the total, and the net balance, of the N20 and EDN movements, without identifying specific customs declarations, and included at least 11 instances where none of the goods had been located and counted in the course of the June 2016 stock take. In the case of Trojan Trading's goods, Appendix A typically did identify the relevant N20 entry document for the listed goods, but it also included about 48 instances where none of the listed goods had been counted in the June 2016 stock take. 86. In relation to each of the listed products, Appendix A contained comments indicating instances where (a) goods were uncounted:- reconciliation of customs declaration documentation suggested stock had been entered for warehousing under N20 Declarations, and should be held in the warehouse, but none had either been listed in the bond register or located and counted at the time of the stock take "count". (b) goods were not registered:- stock had been located in the warehouse, but not recorded on the Pegasus bond register. (c) goods were short counted:- there were shortage discrepancies where the stock take "count" tally was less than the balance derived from reconciliation of customs entry and export / entry documentation (ie., N30s and EDNs). (d) the goods register tallies were inaccurate:- the product tallies recorded in the bond register were sometimes greater than, and sometimes less than, the stock take count for the corresponding products. 87. Appendix B to the 9 October 2016 request letter dealt with exported goods, where there were issues about the details or currency of an EDN. The items listed in Appendix B apparently invariably listed the identifying EDN number, but frequently did not identify the N20 entry declaration relating to the goods. (emphasis in original) 14 The Collector granted Pegasus an extension of time in which to respond to the request to account. There followed, between November 2016 and August 2017, correspondence between Pegasus and the Collector. The Tribunal provided the following overview of that correspondence at T[88] to [89]: 88. 4 November 2016 to August 2017:- Having obtained an extension of time, Pegasus provided written responses to, and made various representations about, the October 2016 request. The principal elements of the written responses were detailed comments about the various Appendix items, and some supporting documents, that Pegasus provided on 4 November 2016, 17 and 31 March 2017, and 15 May 2017. Pegasus representations about the October 2016 request, and more particularly, about the stock take "count", were made in the course of various telephone discussions and meetings in February, March, April, May and August 2017. The general thrust of Pegasus' responses and representations was to the effect that:- (a) some shortfalls were accepted:-- in the light of the activities Pegasus had undertaken since the October 2016 request, some shortfalls indicated by the stock take "count" were accepted. (b) movement document errors:- some warehouse stock take "count" discrepancies were likely to be explained by mis-delivery / mis-recording of items, errors in N20, N30 and EDN documentation, and by the unrecorded discarding of damaged items. (c) movement document delays:- other apparent stock discrepancies related to movements from the warehouse that had occurred prior to the stock take count but were the subject of import and export declarations (ie., N30s and EDNs) that had been lodged after (and were not available at the time of) the count. (d) miscounted goods:- other apparent warehouse stock discrepancies related to products that Pegasus asserted remained in the warehouse and had been missed / miscounted in the June 2016 stock take "count" exercise. (e) new goods register:- Pegasus was in the process of significantly improving its warehouse practices and correcting and improving its warehouse records systems, particularly by the creation of a new "master" bond register. (f) request for new stocktake count:- having regard to the various considerations above, Pegasus suggested that a "new stocktake" be conducted by the Customs personnel and asked for appropriate notice, if such a new stocktake was to be carried out. 89. Pegasus' contention that some of the alcohol and tobacco goods had been missed, or miscounted, in the June 2016 stock take count resulted in its persistent encouragement for Customs officers to return to the warehouse and satisfy themselves about the presence and quantity of the goods. This had first been raised, in the context of Pegasus activities in compiling a new "master bond register", and introducing new procedures for its daily updating, in the letter Pegasus delivered to Customs on 4 November 2016. At that time Mr Khokhar considered that such an exercise was unlikely to be useful in resolving the (obviously numerous) irregularities raised in the request to account. Mr Janilionis raised the prospect again at a February 2017 meeting, but Mr Natoli dismissed such an exercise as unlikely to be probative of any relevant conclusion. When the matter was revisited at a further meeting in May 2017, the apparently consensus view of all the Customs officers involved, and certainly that of Mr Khokhar, was that a further inspection would not be relevantly probative, unless it also involved a further comprehensive reconciliation of all the warehouse movements since July 2016. In his oral evidence in the review hearing Mr Khokhar appears to have conceded (and the exercise underlying the Exhibit 4 spreadsheet analysis, to which I refer later, appears to demonstrate) that it would have been possible to undertake a (potentially) less comprehensive reconciliation involving a small number of particular goods. However, he added the qualification that the utility of such an exercise would depend on confidence in the accuracy of the warehouse records, particularly in relation to (i) the ownership of goods and, (ii) the movement of goods under CA s 71E permissions. (bold italic emphasis in original; underline emphasis added) 15 Relevantly, Pegasus requested the Collector's representatives to attend the warehouses to sight particular goods the subject of the request to account and the Collector's representatives declined to do so on the basis that, in their view, this was likely to be inutile. 16 On 29 August 2017, as noted above, the Collector made the demand of Pegasus. The demand was in the following form: Statutory Demand Section 35A Customs Act 1901 To: Pegasus Supply Solutions Pty Ltd ABN: 86128450751 Of: 71-77 Railway Parade MARRICKVILLE NSW 2204 1. You owe the Commonwealth of Australia (the Commonwealth) the amount of $1,638,201.88, being the amount you are liable to pay under section 35A of the Customs Act 1901. 2. You are required to pay to the Commonwealth an amount equal to the amount of the duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which this demand is made. 3. Attached to this statutory demand is a statement of facts and reasons for the decision of Parvesh Khokhar, a taxation officer who is authorised to exercise the powers and functions for the purposes of section 35A of the Customs Act. 4. You are required to pay this amount by 26 September 2017. 5. Failure to comply with this demand may result in legal recovery action of the debt in a court of competent jurisdiction. (emphasis in original) 17 At that point Pegasus had two avenues of legal challenge available to it. As Rares J explained in Seymour v Migration Agents Registration Authority [2006] FCA 965; (2006) 215 FCR 168 at 198 [129], one avenue of challenge involved the executive power of the Commonwealth through a merits review in the Tribunal under the AAT Act; and the other involved the judicial power of the Commonwealth through an application for judicial review under s 75(v) of the Constitution, s 39B of the Judiciary Act, or the Administrative Decisions (Judicial Review) Act 1977 (Cth). 18 As noted above, Pegasus filed an application with the Tribunal under s 273GA(a) of the Customs Act which allows for the making of applications to the Tribunal for review of "a decision of a Collector under s 35A making a demand".

C. THE PROCEEDING BEFORE THE TRIBUNAL 19 In view of Pegasus's contention on this appeal that the Tribunal failed to afford it procedural fairness, it is necessary to address relevant events which occurred prior to and at the hearing before the Tribunal.

C.1 Request made at a pre-trial directions hearing 20 On 7 February 2019, the Senior Member conducted a directions hearing, during which the following exchanges occurred between the Tribunal, counsel for Pegasus (at that point, Mr Whelan) and counsel for the Collector (Ms Phillips): SENIOR MEMBER: Any other direction you seek? MR WHELAN: Yes. Also seeking a direction that if the matter does proceed to hearing, that the tribunal, the parties and their legal representatives, would attend the applicant's site for the purpose of a viewing, so as to inform and assist the tribunal. SENIOR MEMBER: How could that assist? MR WHELAN: Warehouses have their own character. Their own idiosyncrasies, becoming aware of things like how pallets are stacked, triple stacking, double stacking, seeing how goods move from bond register to other parts of the warehouse, my submission is that that does assist, it actually does assist to make more sense of the documentation. Not that it's particularly relevant but it certainly assisted me in preparing for this matter. And the belief is that it would assist the tribunal as well. Especially since - - - SENIOR MEMBER: Would it go to anything more than recognising the possibility that A, these are propensity, or at risk of making the stakes in the account, and establishing that if the account was being taken during an operating bond store, there's an extra reason why there may be mistakes because goods come and go. It wouldn't go any further than those two propositions, would it? MR WHELAN: No, it would not, Senior Member. And indeed, the point of the inspection would be largely, as you have very eloquently put to make it clear, or to submit, that error is more likely than any other explanation in relation to this matter. SENIOR MEMBER: I didn't quite put that, Mr Whelan, I just put in a proposition that there's a risk of mistakes in a busy bond store. MR WHELAN: Indeed, indeed. SENIOR MEMBER: Ms Phillips, what's your attitude? MS PHILLIPS: Both of the proposes courses are opposed, Senior Member. … SENIOR MEMBER: ... What about the view proposition? MS PHILLIPS: I will first say, of course, it's not unheard of for tribunal members to conduct site visits in appropriate cases. (indistinct) last night was a pharmaceutical benefits case where the question was whether the pharmacy was one or two premises. And once can see why a view may be of assistance where that's the question for determination. Here the respondent takes the view that the applicant hasn't identified any fact in issue, the resolution of which would be assisted that the tribunal conducting the proposed view. And that's the difficulty and without articulation of that, the respondent doesn't see the utility of the view and indeed, without any articulation of what's proposed to occur, the respondent is likely to be taken by surprise by whatever the applicant wishes to point out on that proposed view and that would entail its own problems of procedural fairness and the like. (emphasis added) 21 The Tribunal declined to attend the warehouse as requested. The Senior Member gave the following reasons for doing so: At the directions hearing this morning, Mr Whelan has made two applications … The second application Mr Whelan made was for a direction that would have the effect of convening the tribunal at the warehouse premises, for the purpose of conducting a view of the premises. The suggested benefit of conducting such a view would be to obtain a first-hand subjective awareness of the nature of the operations in the warehouse, and simply to have a good picture of the geography of the two premises. I specifically asked Mr Whelan in the course of his submissions to identify the particular benefits that he suggested would be derived from the process of conducting such a view. I understood him to suggest that the benefits would be to derive an understanding of the actual layout and the manner of operation, and perhaps the degree of activity involved in the operation of a warehouse business or businesses of the kind that the applicant conducts. It seems to me that the primary benefit of such a view, conducted what would now be almost three years after the contentious audit count of June 2016 and July 2016, would be only to substantiate the proposition that in a busy warehouse, a busy bond warehouse, where at least some, and perhaps some significant movement of goods inwards and outwards are liable to occur over a period of some 10 days, that being the approximate span of time which appears to have been at the longest relevant to the count audit, count in 2016, that over such a period of time, a large number of movements would create the risk of inaccuracy and mistake in the counting exercise. A particular aspect of that risk of error would be in relation to the movement of goods inwards and outwards from the bond stores during the relevant period, it would be necessary to conduct a careful reconciliation of goods moved in and moved out, as well as those - the reconciliation of the bond register with the goods that were physically identified as present on any particular day. It seems to me that the capacity for error to have occurred in the account is obvious from a basic understanding of the nature of the business, and of the fact, as I understand it, that the bond warehouse was continuing to operate during the period of account. I do not see any significant advantage, or indeed any advantage in undertaking a contemporaneous view of the premises at the present time, certainly in relation to the question of identifying the reality of the risk of a mistake having been made. As I say, the risk is obvious. The factual question is whether or not error has been demonstrated. That factual question is better approached by an exercise of the kind that I've contemplated in the proposed directions, as well as careful scrutiny and perhaps testing of the evidence of both Mr Khokhar and Mr Papworth in the course of the hearing. The further additional advantage, or further advantage that Mr Whelan suggested might flow from the view is an understanding of the layout of the premises. There is already in evidence a diagram of the layout of at least one of the warehouses. And although I do not have a good understanding of the significance of that diagram at the present time, it seems to me that it will go sufficiently to provide an understanding of the physical layout. In any event, the more important question in relation to the physical layout is in relation to the location of the particular items that were present at the count in June and July 2016. An examination of the current layout and distribution of goods within the warehouse seems to me to be bordering on wholly irrelevant to an understanding of the physical circumstances in the warehouse at the time of the count in June 2016 and July 2016. And in making that remark, I express some curiosity as to whether or not any attempt has been made in the current evidence by either the applicant or the respondent to explain the relationship between the bond register and the counting procedure. I entertain some suspicion or apprehension that, in a busy warehouse, there would have to have been some geographical correlation between the bond register and where the items were in the warehouse. My present understanding is that - and it may be wholly deficient, but my present understanding is that it hasn't been the focus of any of the evidence to date to substantiate the proposition or dispute the proposition fundamentally contended for by the applicant. That proposition, as I understand it, is that the contentious goods, or at least the bulk of them, were present in the warehouse at the time of the count. If that proposition is good, I would have thought that, in the underlying management records of the warehouse, it should be possible to say that the goods relate not just to a particular customs document, but that the goods were themselves located in some particular area of the warehouse. Without some kind of geographical map, I entertain some suspicion as to how the business could have been operated in any efficient sense. However, I have expressed that additional observation as a matter of thinking out loud, and I recognise the entire possibility that I may be wholly mistaken in expressing that element of curiosity. However, having made that observation and qualified it in the way in which I just have, I return to formally refuse the application to conduct a view at the premises … (emphasis added)

C.2 Request made on the first day of the hearing 22 On the first day of the hearing - after the Tribunal dismissed an interlocutory application by Pegasus to amend its application by asserting jurisdictional error on the part of the Collector in failing to validly request Pegasus to account for the goods and in denying Pegasus an opportunity to show the goods to the Collector - the following exchange occurred: MR WHELAN: ... The applicant remains concerned that it is unable to show the tribunal, standing in the shoes of the Collector, the goods, and wishes to place that on the record. And also, pose the question how can the applicant show the tribunal the goods, consistent with 37(a) of the Customs Act. Now, given what the Member has just said, it seems that the applicant cannot show the tribunal the goods in the manner in which it wishes to do so. SENIOR MEMBER: And let's be clear about what you are saying. Are you putting that you will not be able to provide an evidentiary basis for me to make a finding that the goods are there, or are you saying that you are operating on the basis that no matter what request I make, and - no matter what request you make and no matter what factual basis there may be for the request, you anticipate I will refuse to visit the site. Which of those two propositions? MR WHELAN: Certainly not the former. But as I say, the applicant has all of the material requested, pursuant to the directions of (indistinct), and it is able to assist the tribunal as it undertakes that reconciliation. I'm simply making the point, Senior Member, that a concern remains that as things stand the applicant is unable to show the tribunal the goods in question. SENIOR MEMBER: What you mean by that is you think I'm going to refuse, no matter what factual circumstances are put to a request, I'm going to refuse to go to the warehouse? MR WHELAN: I'm not saying that. I'm saying as things stand right now, the applicant has not succeeded in its request for that to occur. The applicant, however, does, for the record, make that request, and that request is an open request to the tribunal in the way it has been an open request to Mr Cokar, the Collector, at the time. And it does that purely because it believes that it would assist the tribunal in the way that it believed it would assist Mr Cokar in the conduct of both Mr Cokar's duties, and now the tribunal in the conduct of its duties. SENIOR MEMBER: Mr Whelan, you can operate that on the basis that at the moment I am completely unpersuaded that there is either any need or any utility in me going and seeing the warehouse. But you can also take it on view that if at some stage in the proceedings or any stage in the proceedings you are able to put to me or wish to put to me a further argument that there should be a submission, I will deal with - should be an inspection - I will deal with it on the basis of what you have put at a later time. I am simply saying at the moment, as I said on the previous directions hearing, I am completely unpersuaded that there's any utility in the process. You will have your remedy in due course if that happens to be a wrong exercise of discretion. But you shouldn't operate on the basis that if you're able to establish some reason for me to think there's an evidentiary value in me seeing the warehouse at some stage during the proceedings, other than for the purpose of acknowledging the possibility there may have been mistakes in the stocktake, then I will deal with it on its merits. (emphasis added) 23 The application to have the Tribunal sight goods was not renewed.

D. STATUTORY CONTEXT 24 As outlined above, Pegasus's challenge before the Tribunal concerned the decision to issue a demand under s 35A of the Customs Act. The issue of such a demand is premised upon there having been a failure by Pegasus satisfactorily to account to the Collector within the meaning of s 37 of the Customs Act when requested to do so. A further important component of the statutory context is s 36 of the Customs Act. 25 Those key provisions, to the extent they are presently relevant, are as follows: 35A Amount payable for failure to keep dutiable goods safely etc. (1) Where a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control: (a) fails to keep those goods safely; or (b) when so requested by a Collector, does not account for those goods to the satisfaction of a Collector in accordance with section 37; that person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which the demand was made. (1A) Where: (a) dutiable goods subject to customs control are, in accordance with authority to deal or by authority of a permission given under section 71E, taken from a place for removal to another place; (b) the goods are not, or part of the goods is not, delivered to that other place; and (c) when so requested by a Collector, the person who made the entry or to whom the permission was given, as the case may be, does not account for the goods, or for that part of the goods, as the case may be, to the satisfaction of a Collector in accordance with section 37; the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the duty of Customs which would have been payable on the goods, or on that part of the goods, as the case may be, if they had been entered for home consumption on the day on which the demand was made. (1B) Where: (a) dutiable goods subject to customs control are, by authority of a permission given under section 71E, removed to a place other than a warehouse; and (b) the person to whom the permission was given fails to keep those goods safely or, when so requested by a Collector, does not account for the goods to the satisfaction of a Collector in accordance with section 37; the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which the demand was made. (2) An amount payable under subsection (1), (1A) or (1B) shall be a debt due to the Commonwealth and may be sued for and recovered in a court of competent jurisdiction by proceedings in the name of the Collector. (3) In proceedings under the last preceding subsection, a statement or averment in the complaint, claim or declaration of the Collector is evidence of the matter or matters so stated or averred. (4) This section does not affect the liability of a person arising under or by virtue of: (a) any other provision of this Act; or (b) a security given under this Act. ... 36 Offences for failure to keep goods safely or failure to account for goods … Offences for failure to account for goods (4) A person commits an offence if: (a) goods are subject to customs control; and (b) the person has, or has been entrusted with, the possession, custody or control of the goods; and (c) the person, when so requested by a Collector, does not account for the goods to the satisfaction of a Collector in accordance with section 37. Penalty: 500 penalty units. (5) A person commits an offence if: (a) goods are subject to customs control; and (b) the person has an authority to deal with the goods, or is given a permission under section 71E in relation to the goods; and (c) the goods are taken, in accordance with the authority to deal or by authority of the permission under section 71E, from a place for removal to another place; and (d) the goods are not, or part of the goods is not, delivered to that other place; and (e) the person, when so requested by a Collector, does not account for the goods or for that part of the goods (as the case may be) to the satisfaction of a Collector in accordance with section 37. Penalty: 500 penalty units. (6) A person commits an offence if: (a) goods are subject to customs control; and (b) the person has, or has been entrusted with, the possession, custody or control of the goods; and (c) the person, when so requested by a Collector, does not account for the goods to the satisfaction of a Collector in accordance with section 37. Penalty: 60 penalty units. (7) A person commits an offence if: (a) goods are subject to customs control; and (b) the person has an authority to deal with the goods, or is given a permission under section 71E in relation to the goods; and (c) the goods are taken, in accordance with the authority to deal or by authority of the permission under section 71E, from a place for removal to another place; and (d) the goods are not, or part of the goods is not, delivered to that other place; and (e) the person, when so requested by a Collector, does not account for the goods or for that part of the goods (as the case may be) to the satisfaction of a Collector in accordance with section 37. Penalty: 60 penalty units. (8) An offence against subsection (6) or (7) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. … 37 Accounting for goods A person accounts for goods or a part of goods to the satisfaction of a Collector in accordance with this section if, and only if: (a) the Collector sights the goods; or (b) if the Collector is unable to sight the goods - the person satisfies the Collector that the goods have been dealt with in accordance with this Act. (emphasis in original)

E. THE AMENDED NOTICE OF APPEAL AND THE NOTICE OF CONTENTION 26 Pegasus's amended notice of appeal sets out the following questions of law: 1. Whether the Tribunal erred at law in construing or applying s37 of the Customs Act 1901 ("the Act") so as to deny the Applicant procedural fairness by refusing the Applicant's request to view the Applicant's premises in order to sight the goods in question so as to account for them? 2. Whether the Tribunal erred at law by failing to ensure the Applicant was given a reasonable opportunity to present its case by refusing the Applicant's request to view the Applicant's premises in order to sight the goods in question so as to account for them? 3. Did the Tribunal deny the Applicant procedural fairness when the Tribunal considered possibilities adverse to the Applicant and failed to provide the Applicant the opportunity to be, firstly, informed of and, secondly, the opportunity to respond to those adverse possibilities? 4. Whether the Tribunal overlooked or failed to consider important evidence, or failed to take into account relevant considerations, being the evidence of the Respondent subsequently sighting the goods the subject of the Demand and the physical production to the Tribunal of some goods the subject of the Demand? 5. Is the making of a demand pursuant to s35A of the Act subject to a statutory precondition that a valid request to account has been made pursuant to s35A of the Act? 6. Is a request to account made under s35A of the Act valid if it does not permit accounting by means of s37(a) of the Act? 7. Whether the Tribunal erred at law by finding that a party cannot satisfy a request to account by means of s37(a) of the Act only but, rather, holding that if goods were to be sighted pursuant to s37(a) of the Act, the party is also required to prove that the goods had been dealt with, prior to the making of the request to account, in accordance with the Act as provided for by s37(b) of the Act? 8. Whether the Tribunal erred at law in construing "unable" in s37(b) of the Act as meaning "unable for any reason". 9. Whether the Tribunal's findings in relation to "Mixture Pipe Tobacco" made in the absence of evidence to support such findings or were the findings so illogical or so unreasonable that no reasonable person would have made such findings? 27 Pegasus's amended notice of appeal also sets out 14 grounds of appeal. The grounds which are pressed are as follows: 1. The Tribunal erred at law in finding that a denial of procedural fairness to the Applicant could not be relevant to the decision of the Tribunal. 2. The Tribunal erred at law in finding repeated refusals by the Respondent to sight the goods after making the request to account was not a denial of procedural fairness to the Applicant. 3. The Tribunal erred at law in denying the Applicant procedural fairness by refusing to conduct a view of the Applicant's premises in order to sight goods the subject of the request to account and the subsequent Demand. 4. The Tribunal erred at law in misconstruing the operation of s35A and s37 of the Act in determining the Tribunal was not required to view the Applicant's premises in order to sight goods when requested by the Applicant to do so. 5. The Tribunal erred at law in failing to ensure the Applicant was given a reasonable opportunity to present its case in accordance with s39 of the Administrative Appeals Tribunal Act 1975 by refusing to view the Applicant's premises in order to sight goods when requested by the Applicant to do so. 6. The Tribunal erred at law in overlooking or failing to consider the Applicant's evidence and by failing to take into account relevant considerations, being the Applicant's evidence of the Respondent subsequently sighting the goods the subject of the Demand and the physical production to the Tribunal of some goods the subject of the Demand. 7. The Tribunal erred at law by considering the existence of the possibility the Applicant had dealt with the goods in a manner not authorised under or contrary to the Act in the absence of any evidence to support the existence of that possibility. 8. The Tribunal erred at law by considering a possibility that the Applicant had dealt with the goods in a manner not authorised under or contrary to the Act, being a matter adverse to the Applicant, without first informing the Applicant of that adverse matter and then providing the Applicant an opportunity to address the Tribunal on that adverse matter. 9. The Tribunal erred at law in failing to find the 9 October 2016 request to account invalid in circumstances where the request to account deprived the Applicant of the opportunity to satisfy the Respondent, and subsequently the Tribunal, in accordance with s37(a) of the Act. 10. The Tribunal erred at law in its application of s37 of the Act in finding that, the Applicant could not satisfy the Respondent by showing the goods but, if the goods were to be shown, the Applicant was also required to satisfy the Respondent that the goods had been dealt with in accordance with the Act prior to the issue of the request to account. 11. The Tribunal erred at law in misconstruing s37(b) of the Act by holding that "unable" meant unable for any reason, including a refusal by the Respondent to sight when requested by the Applicant to do so. ... 14. The Tribunal erred at law in determining that the Demand be set aside and remitted (as opposed to varied, or set aside and a new decision substituted) in circumstances where changes in the rate of duty since the making of the Demand materially disadvantaged the Applicant. 28 The Collector relies upon a notice of contention, to the following effect: 1. In the event that, as a pre-condition to the Collector (or the Tribunal standing in the Collector's shoes): 1.1. determining that the Applicant had not accounted for the Contentious Goods within the meaning of ss 35A(1)(b) and 37 of the Customs Act 1901 (Cth); and/or; 1.2. issuing the Demand (or, in the case of the Tribunal, remitting the matter on a basis where a further demand could be issued by the Collector for the Contentious Goods); the Collector needed to: a) request to sight the Contentious Goods; b) attempt to sight the Contentious goods; and/or c) accord to the Applicant a reasonable opportunity to show the Collector the Contentious Goods, after making a request to sight them such pre-condition was satisfied in the course of the Collector's attendance at the Warehouse in June and July 2016. 29 This is an appeal under s 44 of the AAT Act. Although characterised as an appeal, the proceeding is an application to the Court exercising its original jurisdiction: see Ascic v Comcare [2020] FCAFC 105 at [23] (Flick, Banks-Smith and Jackson JJ) and the authorities there cited. 30 The subject matter of the Court's jurisdiction under s 44 of the AAT Act is confined to a question or questions of law; and the ambit of the appeal is similarly confined: Haritos v Federal Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315 at 341 [62(1)] (Allsop CJ, Kenny, Besanko, Robertson and Mortimer JJ).

F. THE CONSTRUCTION OF SECTIONS 35A AND 37 OF THE CUSTOMS ACT

F.1 Introduction 31 The proper construction of ss 35A and 37 of the Customs Act is relevant to a number of the questions of law and grounds of appeal. Thus, it is convenient to address this question of construction first. 32 Section 35A imposes an obligation upon the recipient of a written demand made under that section to pay to the Commonwealth "an amount equal to the amount of the duty of Customs which would have been payable on those goods if they have been entered for home consumption on the day on which the demand was made". That amount is a debt due to the Commonwealth in respect of which the Collector can sue. 33 There are several criteria which must be satisfied prior to the imposition of that obligation, namely that: (1) a person has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control; (2) that person either: (a) fails to keep those goods safely; or (b) when so requested by a Collector, does not account for those goods to the satisfaction of a Collector in accordance with s 37; and (3) the Collector has made a written demand upon that person. 34 The second criterion has two alternatives, the second of which involves s 37. 35 The central question concerning the construction of s 37 which arises in this proceeding is whether or not the expression "unable to sight the goods" in s 37(b) includes the situation in which the Collector (or Tribunal) refuses to sight the goods - i.e. where the Collector (or Tribunal) is unwilling to sight the goods. In other words, is the Collector or Tribunal "unable to sight the goods" when the Collector (or Tribunal) refuses to do so?

F.2 The Tribunal's reasoning 36 The Tribunal's analysis of ss 35A and 37 was detailed and discursive: see T[9] to [59]. This is not a criticism, in circumstances where the Tribunal was dealing with various (and shifting) constructional arguments advanced by the parties. Relevantly, for present purposes, it is convenient to start with T[43], where the Tribunal stated (correctly in my view): ... s 37 should be regarded as having a permissive purpose. That purpose is to allow a requested person to account by either the Collector's sighting of the goods or (albeit contingently) by demonstrating compliant dealing with the goods. Those alternatives are available in response to any request to account. It follows that even if a Collector had previously unsuccessfully requested, or attempted, to sight goods, such a prior failure/lack of success would not necessarily preclude a person who received a subsequent request to account for the same goods from seeking to satisfy the request by producing the goods and seeking to have the Collector sight them. The criterion that enlivens the CA s 35A(1)(b) power to issue a Demand is that the requested person "does not account". That criterion points to the state of affairs when the Demand power is exercised. Consistent with that pointer the CA s 37(b) criterion uses the present tense in identifying the contingency that the Collector "is unable to sight the goods". ... (It may also be noted that, consistent with this interpretation, the Tribunal found at T[64] that the request to account, which required that Pegasus account to the satisfaction of the Collector "necessarily contemplated an accounting in either of the two modes exclusively permitted by CA s 37".) 37 The Tribunal then considered in some detail the meaning of the word "unable" in the expression "is unable to sight the goods" in s 37(b) (T[44] to [57]). The focus of the approach taken by the Tribunal to the construction of the expression "unable to sight the goods" was upon how the word "unable" had been construed in various authorities dealing with other statutes or in contracts: see T[45] to [51]. From those authorities, the Tribunal distilled five considerations, as expressed at T[52]: It follows from the above that considerations relevant to the proper interpretation of "unable" will certainly include (i) the characterisation of the postulated activity as either a matter of duty, or a pre-condition to the assertion of a right or the exercise of a power, (ii) the purpose of the contingency and, (iii) the consequences of it not being satisfied. Two other matters are also likely to be relevant. The first of them is any apparent assumption about the capacity of the postulated actor. The second is the nature of the factual enquiry the "unable" contingency is postulated to involve. 38 The Tribunal then addressed, at T[53] to [56], the five considerations that it had distilled: 53. In the present case there is no basis for characterising a Collector as having a duty to sight the goods:- see paragraph 38 above. Secondly the purpose of the "unable to sight" contingency is simply to permit the requested person to satisfy the Collector of their compliance with the CA provisions, by providing an account of their dealings with the goods. Thirdly, the potential consequences of the contingency not being satisfied (if the Pegasus contention were correct) would be that a Collector's refusal to sight goods, or even a failure to do so (because of a Collector's unreasonable refusal or a mistaken identification or counting of objectively available goods) could preclude the requested party from being able to account for the goods, and render them guilty of offences provided for in CA s 36. 54. In relation to the question of any underlying assumption about the Collector's capacity, the fulsome powers of entry and inspection contained in the CA (as summarised in Schedule 2 Item 11) indicate that the question of ability to sight the goods is unlikely to have been concerned with any inadequacy of a Collector's actual powers. Rather the CA s 37(b) contingency must have been directed at circumstantial inability. But in being so directed, it made no attempt to limit that circumstantial inability to either the physical absence of the goods or to impose any "good reason" or reasonableness limitation on the permissibly relevant considerations. 55. In relation to the question of the likely statutory intention to entertain a factual enquiry about the reasons for, or the reasonableness of, a Collector being "unable to sight the goods", the observations of Heydon JA in Puglisi v Administrative Decisions Tribunal of New South Wales Appeal Panel (2001) 52 NSWLR 350; (2001) 116 LGERA 194; [2001] NSWCA 298 at [60] can be recognised as having analogous force when applied to the present matter. His Honour said this:- [60] ... The expression "unable" in the context of legislation establishing periods limiting the ability of plaintiffs (including plaintiffs of limited intelligence and means, whose mental powers may have been affected by injury) to commence litigation, particularly limitation periods as short as ten days, is to be construed differently from the expression "unable" in the context of a legislative enactment regulating the distribution of licences for the exploitation of a scarce resource. That is peculiarly so where the legislative enactment is part of a scheme creating as criteria for the eligibility to receive permission to exploit the resource events in the history of fishing businesses extending over periods of up to eight years. To construe the legislative enactment as permitting and compelling examination of a series of commercial decisions making up the history of those fishing businesses for periods of that length would call for clearer language than that which is to be found (in the relevant regulation) ... 56. The point to which this passage draws attention is the inherent unlikelihood that the CA s 37(b) contingency (of the Collector being "unable" to sight contentious goods) was intended to invite, or encourage, a factual enquiry about either the objective existence of the goods, or the sufficiency of the reasons for any absence of sighting by a Collector. The only postulated purpose of an enquiry of the former kind would be to establish that the Collector was not objectively "unable to sight" the goods, and was thus required to sight them. But such a requirement would only be triggered by affirmative evidence that the goods were in fact available for identification and sighting as the goods the subject of a relevant request. Evidence of that kind would make any requirement for the Collector to sight the goods one of pointless formality. Such a formality is unlikely to have been the real statutory intention. Conversely, the only purpose of an enquiry about the sufficiency of the Collector's reasons for not sighting goods would be to recognise CA s 37 as having imposed some such conditional obligation, but the actual wording of the provision provides no contextual basis for concluding that such a result would reflect the statutory intention. (emphasis in original) 39 Having done so, the Tribunal expressed the following conclusions: 57. Once these aspects of the CA s 37(b) criterion are appreciated, the unqualified expression "is unable to sight the goods", used in the context of CA provisions that permit, but do not oblige, Customs inspection, most readily carries the meaning "is unable to sight the goods for any reason". With that meaning it at least includes being "unable" because of non-attendance at the warehouse following the 9 October 2016 request, even if that non-attendance was merely the consequence of subjective dissatisfaction with the likely utility of such an attendance. The expression is not confined to the meaning that would be conveyed if it were worded in the passive voice expression that "the goods are unable to be sighted". Nor is it one that requires a factual enquiry about the objective sufficiency of the reasons underlying an absence of "sighting" by a Collector. 58. The preferable construction of CA s 37(b) is that it operates simply as an exclusive, and unqualified, antonym to the "sight" accounting contemplated by CA s 37(a). Interpreted in that way CA s 37(a) & (b) simply posit the alternative situations where a Collector either sights or does not sight the goods. That interpretation captures the essential (and exhaustive) disjunctive apparently suggested by a contextually purposive reading of CA ss 37(a) & (b). It is consistent with the construction of CA s 37 favoured by Kiefel CJ, Bell, Gageler and Gordon JJ in Comptroller General of Customs v Zappia [2018] HCA 54; (2018) 265 CLR 416. Their Honours said (at [29]):- [29] Stated in affirmative terms, the obligation imposed by s 35A(1)(a) is to keep the dutiable goods safely, including by preventing their entry into home consumption without customs duty being paid. Stated in similarly affirmative terms, the obligation imposed by s 35A(1)(b) when read with s 37 is, on request by a Collector, either to show the dutiable goods to a Collector or to satisfy the Collector that those goods have been dealt with in accordance with the Act. (underline and italic emphasis in original; bold emphasis added) 40 More generally, the Tribunal placed considerable emphasis on authorities decided prior to the introduction of ss 36 and 37 into the Customs Act in 2009 - which authorities referred to the breadth of the Collector's discretion as to how the requisite state of satisfaction is to be reached - and reasoned from the absence of a reference to s 37 or its purpose in the Explanatory Memorandum and the second reading speech concerning the Customs Amendment (Enhanced Border Controls and Other Measures) Bill 2009, which was the genesis of s 37, that the legislature did not intend to effect a substantive alteration to the content or the means of satisfying the accounting obligations relating to customable goods (T[34] to [36]).

F.3 Consideration 41 The starting point is the text of s 37, construed having regard to its history, context and purpose: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503 at 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ). As Kiefel CJ, Nettle and Gordon JJ explained in SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at 368 [14]: The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected. 42 A feature of the text of s 37 is that it provides - by dint of the expression "if, and only if" - the only two methods by which a person may account for goods or a part of goods to the satisfaction of a Collector. One is where "the Collector sights the goods". The other is where "if the Collector is unable to sight the goods - the person satisfies the Collector that the goods have been dealt with in accordance with this Act". 43 The ordinary meaning of the word "unable" is "not able", or "incapable": Films & Casting Temple Pty Ltd v Malla [2013] NSWCA 377 at [100] per McDougall J; with whom Ward JA and Gleeson JA agreed. The concept of willingness is, as a matter of ordinary language, distinct from the concept of ability. Further, as Lindgren J (with whom Burchett J generally agreed and Whitlam J agreed) explained in Minister for Immigration & Multicultural Affairs v Prathapan (1998) 86 FCR 95 at 101: "Clearly as a matter of language, unwillingness denotes choice, and inability, an absence of choice". 44 The historical context in which s 37 falls for consideration critically includes the Customs Amendment (Enhanced Border Controls and Other Measures) Act 2009 (Cth). The effect of that Act was, relevantly, by operation of s 3 and Sch 4 to that Act to amend the Customs Act by: (1) adding the words "in accordance with section 37" to each of ss 35A(1)(b), (1A)(c) and (1B)(b); and (2) inserting ss 36 and 37. 45 Those changes took effect from 22 November 2009. 46 The statutory context in which s 37 is found includes, most immediately, Part III of the Customs Act, which deals with customs control examination and securities generally. Within Part III, s 37 is directly linked to other provisions in that Part. In particular: (1) subsections 35A(1)(b),(1A)(c) and (1B)(b) each provide that a failure by a person, when so requested by a Collector, to account for particular goods (or in the case of subsection (1A)(c), part of those goods), "to the satisfaction of a Collector in accordance with section 37" is a criterion for the imposition of a debt upon that person; and (2) the same failure is an element of the offences prescribed by subsections 36(4), (5), (6) and (7). 47 Thus, a recipient of a request to account for particular goods has only the two methods provided by s 37 by which to so account. As Kiefel CJ, Bell, Gageler and Gordon JJ explained in Comptroller General of Customs v Zappia [2018] HCA 54; (2018) 265 CLR 416 at 428 [29]: …Stated in similarly affirmative terms, the obligation imposed by s 35A(1)(b) when read with s 37 is, on request by a Collector, either to show the dutiable goods to a Collector or to satisfy the Collector that those goods have been dealt with in accordance with the Act. 48 A recipient of a request to account for particular goods who fails to account in accordance with one of the two prescribed methods will (assuming satisfaction of the other criteria in s 35A or other elements of s 36): (1) be liable to pay a particular amount of duty as a debt due to the Commonwealth (s 35A); and (2) have committed offences for which penalties may be imposed (s 36). 49 In this context, a construction of "unable" which includes "unwilling" would remove from the recipient of a request to account the ability to satisfy the Collector by the first of the prescribed methods (i.e. having the Collector sight the goods). It is unlikely that the legislature, having expressly provided only two methods by which the recipient could satisfy the Collector and thereby avoid the imposition of a debt and exposure to a penalty, would have intended that one of these methods could be rendered nugatory at the whim of the Collector because the Collector was unwilling to sight the goods. 50 This is particularly so when s 37 is linked to s 36, which create offences: see Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58; (2005) 224 CLR 193 at 210 to 211[45] (Gleeson CJ, Gummow, Hayne and Heydon JJ). 51 In this regard, the decision of the Full Court of this Court in Hurley v Collector of Customs [2022] FCAFC 92; (2022) 292 FCR 243 (Moshinsky, Banks-Smith and Colvin JJ) is germane. That decision also concerned s 35A of the Customs Act, albeit the demand was made in reliance upon s 35A(1)(a), rather than s 35A(1)(b) (i.e. the first part of the criterion described at [33(2)] above). In considering an appeal from the Tribunal, the Full Court addressed a question of statutory construction which arose concerning s 35A(1)(a) and the meaning of the expression "fails to keep the goods safely". In the course of answering that question of statutory construction, the Full Court: (1) identified at 256 [73] that the Tribunal had concluded that, in circumstances where the duty or the goods had not been paid, the appellant had failed to keep the goods safely, notwithstanding the fact that no duty was payable until the goods had left "customs control" and had been delivered into "home consumption"; (2) considered the effect of the decisions of the High Court of Australia in Collector of Customs (NSW) v Southern Shipping Co Ltd [1962] HCA 20; (1962) 107 CLR 279 and Zappia; (3) then stated at 258 [82] to [85]: 82. In each of Southern Shipping and Zappia, something in the nature of loss, destruction or consumption happened to the goods, resulting in a loss of duty, while the goods were subject to customs control. However, in the present case, nothing relevantly happened to the goods, and there was no loss of duty (because duty was not yet due), while the goods were subject to customs control. The goods were delivered into home consumption in accordance with the applicable PSP, and thereupon ceased to be subject to customs control. In these circumstances, we consider that it would be straining the text of s 35A(1) too far to conclude that, in respect of goods that were subject to customs control, Mr Hurley failed to keep the goods safely. 83. Insofar as the Collector submits that, in respect of goods that are subject to customs control, there is a failure to keep the goods safely if the duty on the goods is not paid, irrespective of when the duty is payable, we do not accept that submission. The provision refers to a failure to keep goods safely in the context of goods that are subject to customs control. In our view, in circumstances where no duty is payable while the goods are subject to customs control, it cannot be said that there has been a failure to keep the goods safely by reference to events that do (or do not) happen until later in time. We consider that it must be possible to determine, as at the time when the goods cease to be subject to customs control, whether or not there has been a failure to keep the goods safely. 84. We also consider that a contrary construction would tend to undermine the statutory purpose of the permission regime in s 69. The provisions of the Customs Act need to be read in a coherent manner that gives effect to all of its provisions. If a person who has possession, custody or control of goods that are subject to customs control could be liable under s 35A(1) if duty is not paid by the obligor after the goods are delivered into home consumption pursuant to a PSP, the person would be unwise to allow the goods to be delivered into home consumption. This would tend to undermine the evident purpose of s 69, which is to allow goods to be delivered into home consumption without entering the goods for home consumption. 85. Further, s 36(1) of the Customs Act contains an offence provision in substantially the same terms as s 35A(1). The construction adopted by the Tribunal, and contended for by the Collector, if correct, would apply equally to s 36(1). It is unlikely that the Parliament intended criminal liability to attach in circumstances such as those in the present case, where duty was not payable while the goods were in the possession, custody or control of the relevant person and subject to customs control, the goods were delivered into home consumption in accordance with a permission under s 69, and it was only later that the obligor failed to pay the duty: Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193 at [45] per Gleeson CJ, Gummow, Hayne and Heydon JJ. (italicised emphasis in original; bold emphasis added) 52 The reasoning set out in [85] of Hurley is apposite. It is unlikely that the legislature intended to create a regime under which: (1) criminal liability attached unless the recipient of a request to account took one of two available courses; and (2) one of those courses was subject to the caprice of the Collector. 53 There is no dispute in this proceeding that the purpose of the Customs Act is ensuring that customs duty is collected on dutiable goods before they pass into domestic consumption: see, e.g., Zappia at 427 to 428 [28]. However, this general purpose does not justify the Tribunal's construction. It is necessary also to consider the purpose of s 37, which as was correctly described by the Tribunal at T[43] (see [36] above), also supports a construction of that section in which one of the avenues expressly made available by the legislature by which the recipient of a request to account may satisfactorily account to a Collector and thereby avoid the imposition of a statutory debt and the commission of offences is not defeasible at the whim of the Collector. 54 Further, the Tribunal's reliance upon: (1) authorities which predate the presence of s 37; and (2) the absence of an explanation in the secondary materials to the effect of s 37 as justifying a construction that involves no substantive change to the means of accounting to the Collector (see [40] above) mistakenly ignores the changes introduced by the plain text of s 37 (as well as the effect of s 36 which was introduced at the same time). 55 Finally, the Tribunal's interpretation involved reading into s 37 the additional words "for any reason" after the expression "unable to sight the goods". The matters to be considered before construing legislation as if it contained additional words were described in Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531 at 543 [18], 544 to 545 ([22] to [25]) and 548 to 549 ([38] to [40]) (French CJ, Crennan and Bell JJ) ; see also Stern v Commissioner of Taxation [2024] FCAFC 21 at [46] to [47] (Thawley, Hespe and Horan JJ). Despite referring to Taylor at T[16] and [17] for some general propositions, the Tribunal's reasons did not address the considerations identified therein. 56 In my view there is no basis for construing s 37 as if the words "for any reason" were present. In particular, it is not apparent that there has been an inadvertent failure by the legislature to deal with an eventuality that must be dealt with if s 37 is to achieve its purpose: see Taylor at 544 [23]. The purpose of s 37, as identified by the Tribunal - to provide two methods of satisfactorily accounting to the Collector - is achievable without the Collector being able capriciously to remove one of those methods. 57 For the reasons set out at [41] to [56] above, the Tribunal erred in construing the expression "unable to sight the goods" as meaning "unable to sight the goods for any reason" (T[57]; Tribunal's emphasis). Section 37 should be construed in a manner consistent with a legislative intention of providing to the recipient of a request to account the opportunity to satisfactorily account to the Collector by either having the Collector sight the goods or (where the Collector is unable to sight the goods) by otherwise satisfying the Collector that the goods have been dealt with in accordance with the Customs Act. The expression "unable to sight" in s 37 requires a factual inquiry as to whether the Collector is unable to sight the goods. There are various factual scenarios which may or may not satisfy this expression. However, a refusal to sight the goods, when requested to do so, does not fit within that expression.

F.4 The consequences of the Tribunal's misconstruction of sections 35A and 37 of the Customs Act 58 A consequence of the construction that I prefer is that the Collector is required to afford to the recipient of a request to account procedural fairness with respect to both avenues prescribed by s 37: see, e.g., Disorganized Developments Pty Ltd v South Australia [2023] HCA 22; (2023) 97 ALJR 575 at 583 to 584 ([32] to [33]) (Kiefel CJ, Gageler, Gleeson and Jagot JJ); CPCF v Minister for Immigration and Border Protection [2015] HCA 1; (2015) 255 CLR 514 at 622 [367] (Gageler J); Plaintiff S10/2011 v Minister for Immigration for Citizenship [2012] HCA 31; (2012) 246 CLR 636 at 666 [97] (Gummow, Hayne, Bell and Crennan JJ); Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 618 to 619 (Brennan J) and The Municipal Council of Sydney v Harris [1912] 14 CLR 1 at 5 and 7 to 8 (Griffith CJ), 9 to 10 (Barton J) and 14 (Isaacs J). 59 Pegasus contends that the Collector failed to afford procedural fairness to Pegasus by not agreeing to attend Pegasus's warehouses after the date of the request to account. The Collector denies this contention on several grounds and also relies upon its notice of contention. However, it is not necessary to consider further the contention that the Collector failed to afford procedural fairness to Pegasus when a failure by the Collector to afford procedural fairness to Pegasus would not amount to an error of law by the Tribunal in circumstances where it was no part of the Tribunal's task on review to consider whether the Collector failed to afford procedural fairness to Pegasus: see Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 24 ALR 307 at 343 to 344 (Deane J). The Tribunal correctly recognised this when it denied the interlocutory application by Pegasus to amend its application so as to assert jurisdictional error by the Collector (see [22] above). Of course, any jurisdictional error by the Collector does not deprive the Tribunal of the power to review the Collector's decision: see Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124; (2008) 168 FCR 566 at 573 ([22] to [23]) (French, Tamberlin and Mansfield JJ). 60 Of course, this did not leave Pegasus without a remedy with respect to any failure by the Collector to afford it procedural fairness. As noted at [17] above, as it was open to Pegasus to have brought an application for judicial review of the decision to issue the demand in a court vested with the judicial power of the Commonwealth. 61 The proper construction of ss 35A and 37 is relevant to the question whether the Tribunal failed to afford Pegasus procedural fairness, to which I now turn.

G.1 Introduction 62 Pegasus contends that the Tribunal denied it procedural fairness; and failed to ensure that it was given a reasonable opportunity to present its case in accordance with s 39 of the AAT Act by refusing to attend Pegasus's premises in order to sight goods the subject of the request to account and demand, when requested by Pegasus to do so. 63 An appeal from a decision of the Tribunal on the basis of a denial of procedural fairness raises a question of law: Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143; (2003) 131 FCR 28 at 31 to 33 ([6] to [9]) (Gray ACJ and North J); Haritos at 385 [202].

G.2 The obligation to afford procedural fairness 64 The obligation upon the Tribunal to afford procedural fairness to Pegasus was not in dispute. The Tribunal is subject to an obligation generally to afford procedural fairness: Kioa at 582 to 584 (Mason J); Fletcher v Commissioner of Taxation [1988] FCA 362; (1988) 19 FCR 442 at 454 to 455 (Lockhart, Wilcox and Burchett JJ). 65 Section 39 of the AAT Act provides in so far as is presently relevant that: (1) ... the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case ...

G.3 The content of the obligation to afford procedural fairness 66 The content of the obligation to afford procedural fairness is not fixed and is a function of the statutory framework in which the impugned decision was made and the circumstances of the particular case: see SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 at 160 to 161 ([25] to [26]) (Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ); Telstra Corporation Ltd v Kendall (1995) 55 FCR 221 at 230 (Black CJ, Ryan and Hill JJ); Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd [1994] FCA 1074; (1994) 49 FCR 576 at 589 to 590 (Northrop, Miles and French JJ). As Gleeson CJ explained in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at 13 to 14 [37], fairness is a practical rather than an abstract concept and in considering whether procedural fairness has been afforded, the concern of the law is to avoid practical injustice. 67 Central to the statutory framework are ss 35A, 36 and 37, which are set out at [25] above. As explained at [57] above, s 37 should be construed so as to preserve to the recipient of a request to account the opportunity satisfactorily to account to the Collector by either having the Collector sight the goods or (where the Collector is unable to sight the goods) by otherwise satisfying the Collector that the goods have been dealt with in accordance with the Customs Act.

G.4 Failure to afford procedural fairness and to comply with s 39 of the AAT Act 68 I am satisfied that Pegasus was denied the opportunity to have the Tribunal sight goods that it contended were the subject of the request to account and, consequently, was denied procedural fairness. That is so for the following reasons. 69 First, the Tribunal stood in the shoes of the Collector when undertaking its review of the Collector's decision: Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; (2019) 266 CLR 250 at 271 [51] (Bell J, Gageler, Gordon and Edelman JJ). 70 Secondly, the Tribunal was required to consider the material before it as at the time of its decision: Frugtniet at 271 [51], citing Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286. 71 Thirdly, Pegasus made a request that the Tribunal sight the goods the subject of the request to account on the first day of the hearing (see [22] above). In this regard, I do not consider that the request made at the pre-trial directions hearing (see [20] to [21] above) was a request that the Tribunal attend Pegasus's warehouses for the purpose of sighting the goods. Such a purpose was not suggested by counsel for Pegasus; and when asked by the Tribunal how the proposed view would assist counsel for Pegasus answered: Warehouses have their own character. Their own idiosyncrasies, becoming aware of things like how pallets are stacked, triple stacking, double stacking, seeing how goods move from bond register to other parts of the warehouse, my submission is that that does assist, it actually does assist to make more sense of the documentation. 72 In contrast, on the first day of the hearing, counsel for Pegasus stated plainly that Pegasus wished to show the subject goods to the Tribunal for the purposes of s 37(a). In particular, counsel for Pegasus stated: ... The applicant remains concerned that it is unable to show the tribunal, standing in the shoes of the Collector, the goods, and wishes to place that on the record. And also, pose the question how can the applicant show the tribunal the goods, consistent with 37(a) of the Customs Act. Now, given what the Member has just said, it seems that the applicant cannot show the tribunal the goods in the manner in which it wishes to do so. and I'm simply making the point, Senior Member, that a concern remains that as things stand the applicant is unable to show the tribunal the goods in question. 73 Fourthly, the Tribunal's response was to indicate that it was "completely unpersuaded that there is either any need or any utility in me going and seeing the warehouse" and "completely unpersuaded that there's any utility in the process". 74 Fifthly, although the Tribunal left open the possibility that it could later be persuaded to accede to a request to sight goods, the Tribunal had by that stage made clear its strongly held views and it is of little moment that Pegasus did not make further applications, particularly when the Tribunal suggested that "you will have your remedy in due course if that happens to be a wrong exercise of discretion". 75 Finally, the reasons given by the Tribunal for not acceding to a request that it be shown relevant goods - which reasons were in effect that it saw no utility in such an exercise - are an insufficient basis upon which to deny Pegasus the avenue available to it under s 37(a). The reasons expressed by the Tribunal suggest that it considered the request, not within a frame of reference that included s 37 providing the recipient of a request to account with two available avenues to satisfy it (standing in the shoes of the Collector), but instead within a frame of reference that included the proposition that it was sufficient that a recipient of a request to account have other means of proof available under s 37(b). The former frame of reference is correct; the latter operates on the misconstruction of s 37 discussed above. 76 The actions and omissions of the Tribunal also constituted a failure of the Tribunal to comply with its statutory duty under s 39(1) of the AAT Act to give Pegasus a reasonable opportunity to present its case, and thus was an error of law: see O'Sullivan v Repatriation Commission [2003] FCA 387; (2003) 128 FCR 590 at 605 [60] (Sackville J); Repatriation Commission v Farley-Smith [2007] FCA 1058; (2007) 96 ALD 348 at 360 [63] (Middleton J). 77 The Collector's notice of contention contains various permutations. The only permutation of apparent relevance to the question of whether the Tribunal failed to afford procedural fairness to Pegasus by not allowing Pegasus the opportunity to have the Tribunal sight the goods (on a construction of the notice of contention favourable to the Collector) is the contention that the Tribunal's obligation to afford such procedural fairness to Pegasus was satisfied by the Collector's attendance at Pegasus's warehouses during June and July 2016. In support of this contention the Collector submitted that a request to account (which need not be written) was made during May 2016 and the Collector attended in June and July 2016 to sight goods. 78 I accept that s 35A(1)(b) does not require that the request to account be in writing. However, I do not accept the remainder of the submission. Section 35A(1)(b) requires that the request be a request to account in accordance with s 37. This follows from the words "when so requested" at the beginning of s 35A (1)(b). There is no evidence that any request to account in accordance with s 37 was made in May 2016, and the only evidence of such a request having been made is the request to account issued on 10 October 2016.

G.5 Should the Tribunal's order be set aside and the matter remitted to the Tribunal? 79 The conclusion that the Tribunal made an error of law is not itself a sufficient basis for orders setting aside the Tribunal's order and remitting the matter to the Tribunal. It is also necessary in an appeal under s 44 of the AAT Act to consider whether the error was material to the decision of the Tribunal. As the High Court of Australia (Kiefel CJ, Bell, Gageler, Keane and Gordon JJ) explained in Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd [2020] HCA 2; (2020) 270 CLR 494 at 513 [40], by reference to the decisions of the Full Court of this Court in Hyundai Automotive Distributors v Australian Customs Service (1998) 81 FCR 590 at 599 (Hill, Sackville and Madgwick JJ) and 3D Scaffolding Pty Ltd v Federal Commissioner of Taxation [2009] FCAFC 75; (2009) 75 ATR 604 at 614 [35] (Emmett, Kenny and McKerracher JJ): … for an error of law on the part of the Tribunal identified in an appeal on a question of law to the Federal Court to result in an order setting aside the decision of the Tribunal, the error must be shown to be material to the decision of the Tribunal in the sense that the decision which was in fact made by the Tribunal might have been different if the error of law had not occurred. 80 This is not a case in which I can be sure of the outcome had the Tribunal agreed to sight the goods. There appears to be a realistic possibility that the outcome might or could have been different if such an inspection had occurred. In this regard: (1) I do not accept the Collector's submission that the course that was followed at the Tribunal's suggestion after the Tribunal declined to sight the goods, namely the use of the spreadsheet which became Exhibit 4A, necessarily led to the same result that would have been achieved had the goods been sighted; (2) it seems unlikely that (and it was not suggested that) the request made by counsel for Pegasus on the first day of the hearing that the Tribunal sight goods was a mere frolic. In short, I am not satisfied that the outcome would have inevitably been the same if the error had not been made: see LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12 (at [16]) (Gageler CJ, Gordon, Edelman, Steward, Gleeson and Jagot JJ).

H. THE REMAINING QUESTIONS OF LAW AND GROUNDS OF APPEAL 81 In view of the conclusion that I have reached as to the failure of the Tribunal to afford procedural fairness to Pegasus, the Tribunal's order should be set aside and the matter should be remitted to the Tribunal. Accordingly, I deal succinctly below with the remaining questions of law and grounds of appeal that were argued by the parties.

H.1 Failure to consider particular evidence 82 Pegasus contended, in essence, that the Tribunal erred by overlooking or failing to consider evidence of Mr William Gary Rudd - a Collector within the meaning of the term in the Customs Act - that he visited Pegasus's warehouses between 17 June 2019 and 20 June 2019 and sighted goods which were the subject of the demand. 83 The evidence of Mr Rudd was not referred to in the Tribunal's reasons. However, the absence of a reference to that evidence in the Tribunal's reasons is of itself insufficient to establish that the Tribunal failed to consider that evidence: ETA067 v The Republic of Nauru [2018] HCA 46; (2018) 92 ALJR 1003 at 1006 [13] (Bell, Keane and Gordon JJ). 84 The effect of Pegasus's submissions is to invite the Court to draw from the absence of any reference to that evidence in the Tribunal's reasons an inference that the Tribunal did not consider that evidence. 85 In determining whether, as a matter of inference, the Tribunal considered Mr Rudd's evidence it is necessary to consider the Tribunal's reasons, in order to understand why the Tribunal exercised its power in the way that it did: Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; (2014) 231 FCR 437 at 446 [47] (Allsop CJ, Robertson and Mortimer JJ). The Tribunal's reasons are to be read as a whole and fairly, and not with an eye keenly attuned to the perception of error, and the Court should not be concerned with looseness in language or unhappy phrasing: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 271 to 272 (Brennan CJ, Toohey, McHugh and Gummow JJ); BVD17 v Minister for Immigration and Border Protection [2019] HCA 34; (2019) 268 CLR 29 at 45 [38] (Kiefel CJ, Gageler, Bell, Keane, Nettle and Gordon JJ); Plaintiff M1/2021 v Minister for Home Affairs [2022] HCA 17; (2022) 275 CLR 582 at 604 [38] (Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ). 86 The caution to be observed before drawing an inference that a Tribunal has failed to address a particular matter was explained by a Full Court of this Court (French, Sackville and Hely JJ) in Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184; (2003) 236 FCR 593 at 604 to 605 ([46] to [47]): 46. It is plainly not necessary for the Tribunal to refer to every piece of evidence and every contention made by an applicant in its written reasons. It may be that some evidence is irrelevant to the criteria and some contentions misconceived. Moreover, there is a distinction between the Tribunal failing to advert to evidence which, if accepted, might have led it to make a different finding of fact (cf Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [87]-[97]) and a failure by the Tribunal to address a contention which, if accepted, might establish that the applicant had a well-founded fear of persecution for a Convention reason. The Tribunal is not a court. It is an administrative body operating in an environment which requires the expeditious determination of a high volume of applications. Each of the applications it decides is, of course, of great importance. Some of its decisions may literally be life and death decisions for the applicant. Nevertheless, it is an administrative body and not a court and its reasons are not to be scrutinised "with an eye keenly attuned to error". Nor is it necessarily required to provide reasons of the kind that might be expected of a court of law. 47. The inference that the Tribunal has failed to consider an issue may be drawn from its failure to expressly deal with that issue in its reasons. But that is an inference not too readily to be drawn where the reasons are otherwise comprehensive and the issue has at least been identified at some point. It may be that it is unnecessary to make a finding on a particular matter because it is subsumed in findings of greater generality or because there is a factual premise upon which a contention rests which has been rejected. Where however there is an issue raised by the evidence advanced on behalf of an applicant and contentions made by the applicant and that issue, if resolved one way, would be dispositive of the Tribunal's review of the delegate's decision, a failure to deal with it in the published reasons may raise a strong inference that it has been overlooked. 87 I am not satisfied that the Tribunal failed to consider Mr Rudd's evidence, in circumstances where: (1) Mr Rudd's evidence is of a stock take undertaken in 2019 for a different purpose; (2) it does not appear to be evidence of such importance that one would expect it have been referred to in the Tribunal's reasons. In this regard, I was not directed to any written or oral submission on behalf of Pegasus to the Tribunal which referred to that evidence; and having requested and reviewed the parties' final submissions to the Tribunal I am not persuaded that Mr Rudd's evidence was of such importance that one would expect the Tribunal's reasons to have referred to it; and (3) thus it was open to the Tribunal to have considered that evidence to be insufficiently material to its determination to have warranted specific mention.

H.2 The making of serious findings without evidence 88 At T[128], the Tribunal stated: It is of course possible that (some or all of) the goods that were the subject of post June 2016 location, and / or ex warehouse movements, were not in the warehouses at the time of the June 2016 count. They may have been moved (temporarily) and later returned, without appropriate record, or without either appropriate authority or record. They may have been delivered to home consumption or exported without authority, and later replaced with other goods of the same description, for the purpose of purporting to respond to the October 2016 request, or to resist the Demand. Those possibilities are inconsistent with Pegasus' sustained assertion that the goods had remained in the warehouse. The likelihood of the occurrence of any of them is not pointed to by any specific evidence. Nevertheless, Customs submitted that the mere "post-count" warehouse presence of goods would not constitute satisfactory accounting. Customs' initial submission was that Pegasus would also need to provide "clear and cogent" evidence to explain why the goods had not been sighted during the June 2016 "count". But adherence to that submission was inherently inconsistent with Customs' ultimate (albeit guarded) invitation for the Tribunal to accept (as reflecting a satisfactory accounting) the reconciliation exercise set out in the worksheets in Exhibit 4A, in relation to many of the goods that had not been counted in the June 2016 stock take count:- see paragraphs [107] and [112(b)] to [112(d)] above. That invitation was perhaps consistent with the proposition, advanced in Customs' August 2018 Contentions statement document, that a sufficient accounting would have been provided if "post count" warehoused goods were shown to have been "the actual goods that entered the warehouses during the audit period". That invitation, and the proposition apparently underlying it, discourages a finding that would attach significance to the merely unexplained June 2016 account discrepancy (ie., the occurrence of the temporary movement possibilities alluded to earlier in this paragraph). When regard is had to what has ultimately become a small number of contentious items (compared to the multiplicity of stored products and the scope of the October 2016 request - see paragraphs [76] & [85] above) it is also an invitation that discourages according determinative significance to the general criticism of the accuracy of Pegasus' warehouse accounting records (see paragraph [110] above), in the absence of a basis for actual dissatisfaction with the records relating to particular goods. (emphasis in original) 89 Pegasus contends that the Tribunal erred at law by considering the possibility that it had dealt with the goods in a manner not authorised under or contrary to the Customs Act: (1) in the absence of any evidence to support the existence of that possibility; and (2) without first informing it of that adverse matter and then providing it an opportunity to address the Tribunal on that matter. 90 Pegasus submitted, in essence, that: (1) the Tribunal found it was "of course possible" Pegasus had temporarily moved and later returned the goods without appropriate authority or recorded or delivered the goods into home consumption illegally and later misrepresented that other goods, with a matching description, were the original goods; (2) these findings were made without evidence; (3) the Tribunal did not raise these possibilities with Pegasus during the hearing and the Collector had not alleged them. Thus, Pegasus did not have the opportunity to adduce evidence as to the authenticity of the goods, nor did it have the opportunity to provide evidence which demonstrated the goods were not suitably packaged for the domestic market and therefore not suitable for distribution to home consumption; (4) the Tribunal failed to afford Pegasus procedural fairness by making findings as to the possibility of Pegasus acting fraudulently without evidence; and (5) whilst it is unclear how determinative these findings were in the Tribunal's decision, the findings at T[128] nonetheless formed part of the Tribunal's reasoning and are therefore subject to requirements of the fair hearing rule. 91 Having read T[128] as part of the reasons as a whole and with the circumspection referred to at [85] above in mind, I am not persuaded that the Tribunal did anything more than identify the existence of logical possibilities. Importantly, the Tribunal noted "[t]he likelihood of the occurrence of any of them is not pointed to by any specific evidence". No finding was made of a kind that would have required that Pegasus be heard before it was made.

H.3 The remittal by the Tribunal to the Collector 92 Pegasus expressly abandoned its challenge to the Tribunal's decision to remit the matter to the Collector for redetermination, in the event that it succeeded on any other ground. As I have determined that Pegasus should succeed, this ground need not be considered further.

I. CONCLUSION 93 For the reasons set out above, the order made by the Tribunal should be set aside and the matter remitted to the Tribunal. I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.